What changed in this filing

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Item 1. Financial Statements

2024-10-25 compared with 2024-07-26 · 175 added, 137 removed, 670 unchanged (32% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Impairment of goodwill, intangibles and other assets 260 263 266 274

Operating income 163 120 179 84

Operating income (loss) ( 121 ) ( 159 ) 58 ( 75 )

Non-operating expenses:

2 unchanged sentences

Other expense, net 9 70 15 91

Income (loss) before income taxes 84 35 24 ( 81 )

Income tax provision (benefit) 39 17 ( 12 ) 3

Net income (loss) $ 45 $ 18 $ 36 $ ( 84 )

Loss before income taxes ( 205 ) ( 298 ) ( 181 ) ( 379 )

Income tax benefit ( 7 ) ( 80 ) ( 19 ) ( 77 )

Net loss $ ( 198 ) $ ( 218 ) $ ( 162 ) $ ( 302 )

Weighted average common shares outstanding:

1 unchanged sentence

Diluted 416.0 414.2 415.3 414.1

Earnings (loss) per share:

Loss per share:

Basic $ ( 0.48 ) $ ( 0.53 ) $ ( 0.39 ) $ ( 0.73 )

1 unchanged sentence

COMPREHENSIVE INCOME (LOSS):

Net income (loss) $ 45 $ 18 $ 36 $ ( 84 )

Net loss $ ( 198 ) $ ( 218 ) $ ( 162 ) $ ( 302 )

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Derivative financial instruments ( 1 ) 9 13 ( 8 )

Total other comprehensive loss, net of tax ( 28 ) ( 17 ) ( 37 ) ( 10 )

Total comprehensive income (loss) $ 17 $ 1 $ ( 1 ) $ ( 94 )

Total other comprehensive income (loss), net of tax ( 6 ) 46 ( 43 ) 36

Total comprehensive loss $ ( 204 ) $ ( 172 ) $ ( 205 ) $ ( 266 )

See Notes to Condensed Consolidated Financial Statements (Unaudited).

3 unchanged sentences

(Amounts in millions, except par values)

September 30,

2024 December 31,

22 unchanged sentences

Stockholders’ equity:

Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at June 30, 2024 and December 31, 2023)

Common stock ( 800.0 authorized shares, $ 1.00 par value, 441.2 shares and 439.6 shares issued at June 30, 2024 and December 31, 2023, respectively)

Treasury stock, at cost ( 25.8 shares and 25.3 shares at June 30, 2024 and December 31, 2023, respectively)

Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at September 30, 2024 and December 31, 2023)

Common stock ( 800.0 authorized shares, $ 1.00 par value, 442.2 shares and 439.6 shares issued at September 30, 2024 and December 31, 2023, respectively)

Treasury stock, at cost ( 26.2 shares and 25.3 shares at September 30, 2024 and December 31, 2023, respectively)

( 633 ) ( 627 )

9 unchanged sentences

(Amounts in millions)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income (loss) $ 36 $ ( 84 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net loss $ ( 162 ) $ ( 302 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 245 240

12 unchanged sentences

Capital expenditures ( 163 ) ( 209 )

Proceeds from sale of divested businesses and investment 14 —

Swap proceeds 25 34

8 unchanged sentences

Equity compensation activity and other, net ( 14 ) ( 4 )

Net cash provided by (used in) financing activities 78 ( 158 )

Net cash used in financing activities ( 64 ) ( 405 )

Exchange rate effect on cash, cash equivalents and restricted cash ( 15 ) ( 8 )

11 unchanged sentences

Stock Treasury

Stock Additional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Loss Total Stockholders' Equity

Balance at March 31, 2024 $ 441 $ ( 631 ) $ 6,900 $ ( 2,735 ) $ ( 899 ) $ 3,076

Comprehensive income (loss) — — — 45 ( 28 ) 17

Stock Additional Paid-In Capital Retained Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity

Balance at June 30, 2024 $ 441 $ ( 631 ) $ 6,887 $ ( 2,690 ) $ ( 927 ) $ 3,080

Comprehensive loss — — — ( 198 ) ( 6 ) ( 204 )

Dividends declared on common stock - $ 0.07 per share

1 unchanged sentence

Equity compensation, net of tax 1 ( 2 ) 16 — — 15

Balance at June 30, 2024 $ 441 $ ( 631 ) $ 6,887 $ ( 2,690 ) $ ( 927 ) $ 3,080

Balance at September 30, 2024 $ 442 $ ( 633 ) $ 6,872 $ ( 2,888 ) $ ( 933 ) $ 2,860

Balance at December 31, 2023 $ 440 $ ( 627 ) $ 6,915 $ ( 2,726 ) $ ( 890 ) $ 3,112

Comprehensive income (loss) — — — 36 ( 37 ) ( 1 )

Comprehensive loss — — — ( 162 ) ( 43 ) ( 205 )

Dividends declared on common stock - $ 0.21 per share

1 unchanged sentence

Equity compensation, net of tax 2 ( 6 ) 47 — — 43

Balance at June 30, 2024 $ 441 $ ( 631 ) $ 6,887 $ ( 2,690 ) $ ( 927 ) $ 3,080

Balance at September 30, 2024 $ 442 $ ( 633 ) $ 6,872 $ ( 2,888 ) $ ( 933 ) $ 2,860

Stock Treasury

Stock Additional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Loss Total Stockholders' Equity

Balance at March 31, 2023 $ 439 $ ( 627 ) $ 6,965 $ ( 2,440 ) $ ( 1,004 ) $ 3,333

Stock Additional Paid-In Capital Retained Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Balance at June 30, 2023 $ 440 $ ( 627 ) $ 6,945 $ ( 2,422 ) $ ( 1,021 ) $ 3,315

Comprehensive income (loss) — — — ( 218 ) 46 ( 172 )

2 unchanged sentences

Equity compensation, net of tax — — 12 — — 12

Balance at June 30, 2023 $ 440 $ ( 627 ) $ 6,945 $ ( 2,422 ) $ ( 1,021 ) $ 3,315

Balance at September 30, 2023 $ 440 $ ( 627 ) $ 6,928 $ ( 2,640 ) $ ( 975 ) $ 3,126

Balance at December 31, 2022 $ 439 $ ( 623 ) $ 7,052 $ ( 2,338 ) $ ( 1,011 ) $ 3,519

Comprehensive loss — — — ( 84 ) ( 10 ) ( 94 )

Comprehensive income (loss) — — — ( 302 ) 36 ( 266 )

Dividends declared on common stock - $ 0.37 per share

1 unchanged sentence

Equity compensation, net of tax 1 ( 4 ) 31 — — 28

Balance at June 30, 2023 $ 440 $ ( 627 ) $ 6,945 $ ( 2,422 ) $ ( 1,021 ) $ 3,315

Balance at September 30, 2023 $ 440 $ ( 627 ) $ 6,928 $ ( 2,640 ) $ ( 975 ) $ 3,126

See Notes to Condensed Consolidated Financial Statements (Unaudited).

15 unchanged sentences

GAAP in preparing the Company’s condensed consolidated financial statements requires the pervasive use of estimates and assumptions.

The Company continues to be impacted by inflationary pressures, soft global demand, major retailers’ focus on tight control over inventory levels, elevated interest rates and indirect macroeconomic impacts from geopolitical conflicts.

The Company continues to be impacted by inflationary pressures, soft global demand, major retailers’ focus on tight control over their inventory levels, elevated interest rates and indirect macroeconomic impacts from geopolitical conflicts.

These collective macroeconomic trends, the duration or severity of which are highly uncertain, are still changing the retail and consumer landscape and are expected to continue to negatively impact the Company’s operating results, cash flows and financial condition during the current year.

3 unchanged sentences

Although management has made its best estimates and assumptions based upon current information, actual results could materially differ given the uncertainty of these factors and may require future changes to such estimates and assumptions, including reserves, which may result in future expense or impairment charges.

During the third quarter of 2024, the Company concluded that triggering events had occurred for indefinite-lived tradenames in the Home and Commercial Solutions (“H&CS”) and Learning and Development (“L&D”) segments, as a result of downward revisions of forecasted cash flows primarily due to lower volume and profitability expectations.

The Company performed quantitative impairment tests and determined that indefinite-lived tradenames in the H&CS and L&D segments were partially impaired.

During the third quarter of 2024, the Company recorded an aggregate non-cash impairment charge of $ 260 million for the indefinite-lived tradenames, as the carrying values exceeded their fair values.

See Footnote 6 for further information.

Seasonal Variations

3 unchanged sentences

In addition, uncertainty still remains over the volatility and direction of future consumer and customer demand patterns, as well as inflationary pressures.

Accordingly, the Company’s results of operations and cash flows for the three and six months ended June 30, 2024 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2024.

Accordingly, the Company’s results of operations and cash flows for the three and nine months ended September 30, 2024 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2024.

Recent Accounting Pronouncements

4 unchanged sentences

Improvements to Reportable Segment Disclosures.” The amendments in this update require that a public entity disclose on an annual and interim basis significant segment expenses that are regularly provided to the entity’s chief operating decision maker (the “CODM”), nature and amount of other financial information by reportable segment and any additional measures of a segment’s profit or loss used by the CODM in assessing segment performance and deciding allocation of resources.

The amendments in ASU 2023-07 are effective for fiscal

years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

18 unchanged sentences

Sales of Accounts Receivables

Factored receivables at June 30, 2024 associated with the Company’s existing factoring agreement for certain customer receivables (the “Customer Receivables Purchase Agreement”) were approximately $ 360 million, an increase of approximately $ 120 million from December 31, 2023.

Factored receivables at September 30, 2024 associated with the Company’s existing factoring agreement for certain customer receivables (the “Customer Receivables Purchase Agreement”) were approximately $ 290 million, an increase of approximately $ 50 million from December 31, 2023.

Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction.

7 unchanged sentences

Although the SPE is consolidated in the Company’s condensed consolidated financial statements, it is a separate legal entity with separate creditors.

The assets of the SPE are not available to pay creditors of the Company or its subsidiaries.

The assets of the SPE are not

available to pay creditors of the Company or its subsidiaries.

The fair value of these servicing arrangements as well as the fees earned were immaterial.

The Company accounts for receivables sold from the SPE to the financial institution as a sale of financial assets and derecognizes the trade receivables from the Company’s Condensed Consolidated Balance Sheet.

The balance of outstanding accounts receivables sold to the financial institution as of June 30, 2024 was $ 145 million, an increase of approximately $ 100 million from December 31, 2023.

The balance of outstanding accounts receivables sold to the financial institution as of September 30, 2024 was $ 140 million, an increase of approximately $ 95 million from December 31, 2023.

Cash received under the Receivables Facility is classified as an operating cash flow and collections of accounts receivables not yet submitted to the financial institution as a financing cash flow in the Condensed Consolidated Statement of Cash Flows.

7 unchanged sentences

The Company does not provide any guarantees or collateral under the New SCF Program, nor does it have any economic interest in a supplier’s decision to participate in the New SCF Program.

Amounts due under the New SCF Program will be included in accounts payable in the Condensed Consolidated Balance Sheets and as operating cash flows in the Condensed Consolidated Statement of Cash Flows.

Amounts due to suppliers participating in the New SCF Program are included in accounts payable in the Condensed Consolidated Balance Sheets and amounts paid to suppliers participating in the New SCF Program are classified as operating cash flows in the Condensed Consolidated Statement of Cash Flows.

Supplier payment terms for those participating in the program averaged approximately 119 days.

Prior to the New SCF Program, a global financial institution offered a voluntary supply chain finance program (the “Former SCF Program”) which similarly enabled suppliers, at their sole discretion, to sell their receivables due from the Company to the financial institution on a non-recourse basis.

2 unchanged sentences

In April 2024, the Company exercised its right to terminate the Former SCF Program with the financial institution.

The Company continued to reflect invoices participating in the Former SCF Program as current liabilities in the Condensed Consolidated Balance Sheet and cash flows from operating activities in the Condensed Consolidated Statement of Cash Flows as of and for the six months ended June 30, 2024, respectively.

Supplier payment terms for those participating in the program average approximately 129 days.

The Former SCF Program was terminated in August 2024.

The termination did not materially impact the Company’s operating results, financial condition or liquidity.

While the Company has entered into the New SCF Program to offer its vendors another supply chain financing option after the termination of the Former SCF program, there has been no activity under the New SCF Program at and during the period ending June 30, 2024.

As such, the following table sets forth the outstanding payment obligations due to the financial institution and activities related to the suppliers who participated in the Former SCF Program:

There were no outstanding payment obligations relating to the Former SCF Program as of September 30, 2024.

The following table sets forth the outstanding payment obligations due to the third-party vendor and activities related to the suppliers who participated in the New and Former SCF Program:

Balance at December 31, 2023

Invoices participating in the Former SCF Program 111

Invoices paid to the financial institution ( 180 )

Balance at June 30, 2024

Invoices participating in the Supplier Finance Programs 125

Invoices paid to the financial institution and third-party vendor ( 207 )

Balance at September 30, 2024

Footnote 2 — Accumulated Other Comprehensive Income (Loss)

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the six months ended June 30, 2024 (in millions):

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the nine months ended September 30, 2024 (in millions):

Adjustment Pension and

5 unchanged sentences

Net current period other comprehensive income (loss) ( 61 ) 5 13 ( 43 )

Balance at June 30, 2024 $ ( 727 ) $ ( 188 ) $ ( 12 ) $ ( 927 )

Reclassifications from AOCL to the results of operations for the three and six months ended June 30, 2024 and 2023 were pretax (income) expense of (in millions):

Balance at September 30, 2024 $ ( 729 ) $ ( 191 ) $ ( 13 ) $ ( 933 )

Reclassifications from AOCL to the results of operations for the three and nine months ended September 30, 2024 and 2023 were pretax (income) expense of (in millions):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Cumulative translation adjustment (1)

$ 1 $ — $ 1 $ —

Pension and postretirement benefit plans (2)

3 unchanged sentences

(2) See Footnote 10 for further information.

(3) See Footnote 9 for further information.

The income tax provision (benefit) allocated to the components of AOCL for the periods indicated are as follows (in millions):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

11 unchanged sentences

The Company will also further optimize the Company’s real estate footprint and pursue other cost reduction initiatives.

These actions are expected to be substantially implemented by the end of 2024, subject to local law and consultation requirements.

These actions are expected to be substantially implemented by the end of 2024, subject to local law and consultation

requirements.

Restructuring and restructuring-related charges associated with these actions are estimated to be in the range of $ 75 million to $ 90 million and are expected to be substantially incurred by the end of 2024.

2 unchanged sentences

The Company commenced organizational realignment activities during the first quarter of 2024.

During the three and six months ended June 30, 2024, the Company recorded restructuring charges of $ 9 million and $ 31 million, respectively.

During the three and six months ended June 30, 2024, the Company also recorded restructuring-related charges of $ 8 million in connection with the Realignment Plan.

During the three and nine months ended September 30, 2024, the Company recorded restructuring charges of $ 1 million and $ 32 million, respectively.

During the three and nine months ended September 30, 2024, the Company also recorded restructuring-related charges of $ 2 million and $ 10 million, respectively, in connection with the Realignment Plan.

The Company has incurred aggregate charges of $ 42 million since inception in connection with the Realignment Plan.

1 unchanged sentence

See Footnote 5 for further information.

Also in June 2024, the Company entered into an agreement with an unrelated third party to sell and leaseback its current headquarters facility, which is expected to close during the third quarter of fiscal year 2024.

The Company intends to occupy the current facility while waiting to build-out

the new facility, which is anticipated to be completed during the first half of fiscal year 2025.

The Company intends to occupy the current facility while waiting to build-out the new facility, which is anticipated to be completed during the first half of fiscal year 2025.

Management concluded the sale of the current headquarters facility satisfied the criteria to be classified as held for sale at June 30, 2024.

As such, the Company wrote down the carrying value of the assets held for sale to their fair value less cost to sell.

During the second quarter of 2024, the Company recorded a net charge of $ 6 million inclusive of a fair market value adjustment related to the below market rental payments associated with the sale leaseback transaction, which was recorded within impairment of goodwill, intangibles and other assets in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2024.

The underlying assets held for sale were classified within prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet as of June 30, 2024.

The underlying assets held for sale were classified within prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet as of September 30, 2024.

Network Optimization Project

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

June 30, Incurred since inception

September 30, Nine Months Ended

September 30, Incurred since inception

2024 2023 2024 2023

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

June 30, Incurred since inception

September 30, Nine Months Ended

September 30, Incurred since inception

2024 2023 2024 2023

12 unchanged sentences

The Company also incurs other restructuring and restructuring-related charges in connection with various discrete initiatives.

The Company recorded $ 1 million of other restructuring costs for both the three and six months ended June 30, 2024 and $ 3 million and $ 5 million, during the three and six months ended June 30, 2023, respectively.

The Company recorded $ 2 million and $ 3 million of other restructuring costs for the three and nine months ended September 30, 2024, respectively and $ 3 million and $ 8 million of other restructuring costs for the three and nine months ended September 30, 2023, respectively.

Restructuring-related charges are recorded in cost of products sold, selling, general and administrative expenses (“SG&A”) and impairment of other assets in the Condensed Consolidated Statements of Operations based on the nature of the underlying charges incurred.

During the three months ended June 30, 2024 and 2023, the Company recorded immaterial and $ 5 million, respectively of other restructuring-related charges.

During the six months ended June 30, 2024 and 2023, the Company recorded other restructuring-related charges of $ 8 million and $ 12 million, respectively.

During the three months ended September 30, 2024 and 2023, the Company recorded other restructuring-related charges of $ 9 million and $ 16 million, respectively.

During the nine months ended September 30, 2024 and 2023, the Company recorded other restructuring-related charges of $ 17 million and $ 28 million, respectively.

Restructuring charges, net incurred by reportable business segments for all restructuring activities for the periods indicated and the total charges since inception for the Plans are as follows (in millions):

Three Months Ended

June 30, Six Months Ended

June 30, Total incurred since inception of Plans

September 30, Nine Months Ended

September 30, Total incurred since inception of Plans

2024 2023 2024 2023

4 unchanged sentences

$ 4 $ 16 $ 40 $ 76 $ 122

Accrued restructuring costs for the six months ended June 30, 2024 were as follows (in millions):

Accrued restructuring costs for the nine months ended September 30, 2024 were as follows (in millions):

Balance at December 31, 2023 Restructuring

Costs, Net Payments Balance at

June 30, 2024

September 30, 2024

Severance and termination costs $ 30 $ 36 $ ( 49 ) $ 17

1 unchanged sentence

$ 30 $ 40 $ ( 53 ) $ 17

Accrued restructuring costs for the six months ended June 30, 2023 were as follows (in millions):

Accrued restructuring costs for the nine months ended September 30, 2023 were as follows (in millions):

Balance at December 31, 2022 Restructuring

1 unchanged sentence

and Other Balance at

June 30, 2023

September 30, 2023

Severance and termination costs $ 7 $ 71 $ ( 57 ) $ — $ 21

3 unchanged sentences

Inventories are comprised of the following (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials and supplies $ 202 $ 214

4 unchanged sentences

Property, plant and equipment, net, is comprised of the following (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land $ 70 $ 75

3 unchanged sentences

$ 1,153 $ 1,212

Depreciation expense was $ 44 million and $ 51 million for the three months ended June 30, 2024 and 2023, respectively, and $ 95 million and $ 105 million for the six months ended June 30, 2024 and 2023, respectively.

Depreciation expense was $ 47 million and $ 53 million for the three months ended September 30, 2024 and 2023, respectively, and $ 142 million and $ 158 million for the nine months ended September 30, 2024 and 2023, respectively.

In June 2024, the Company entered into an agreement for a right of use operating lease for its Corporate headquarters in Atlanta, Georgia, with an initial lease term of 14.5 years.

The Company has not yet taken possession of the facility;

therefore it has not reflected the right of use asset and lease liability in the Condensed Consolidated Balance Sheet at June 30, 2024.

During the third quarter of 2024, the Company took possession of certain floors of the leased facility and recorded a right of use asset and corresponding lease liability of approximately $ 17 million in the Condensed Consolidated Balance Sheet at September 30, 2024.

The gross minimum contractual aggregate lease payments are approximately $ 106 million.

1 unchanged sentence

Footnote 6 — Goodwill and Other Intangible Assets, Net

Goodwill activity for the six months ended June 30, 2024 is as follows (in millions):

June 30, 2024

Goodwill activity for the nine months ended September 30, 2024 is as follows (in millions):

September 30, 2024

Segments Net Book Value at December 31, 2023

4 unchanged sentences

$ 3,071 $ 3 $ 8,254 $ ( 5,180 ) $ 3,074

During the third quarter of 2023, the Company concluded that a triggering event had occurred for the goodwill associated with the Baby reporting unit in the L&D segment as a result of a downward revision of forecasted cash flows due to lower volume and profitability expectations, as well as rising interest rates.

The Company performed a quantitative impairment test and determined that the Baby reporting unit goodwill was impaired and recorded a non-cash impairment charge of $ 241 million as the carrying value of the reporting unit exceeded its fair value.

Other intangible assets, net, are comprised of the following (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Accumulated Amortization

9 unchanged sentences

The estimated useful lives range from 10 to 15 years, which will increase the Company’s annual amortization expense by $ 25 million, approximately $ 6 million quarterly (approximately $ 0.01 net loss per share per quarter).

Amortization expense for intangible assets was $ 35 million and $ 27 million for the three months ended June 30, 2024 and 2023, respectively, and $ 69 million and $ 54 million for the six months ended June 30, 2024 and 2023, respectively.

During the second quarter of 2023, the Company concluded that a triggering event had occurred for an indefinite-lived tradename in the Home Fragrance reporting unit in the Home and Commercial Solutions segment and for the goodwill associated with the Baby reporting unit in the Learning and Development segment, as a result of a downward revision of forecasted cash flows due to softening global demand, primarily caused by continued inflationary pressure that is impacting discretionary spending behavior of consumers, as well as rising interest rates.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the Home and Commercial Solutions segment was impaired.

During the three and six months ended June 30, 2023, the Company recorded an aggregate non-cash impairment charge of $ 8 million, as the carrying value of the tradename exceeded its fair value.

The Company concluded that the Baby reporting unit goodwill was not impaired during the second quarter of 2023.

Amortization expense for intangible assets was $ 34 million and $ 28 million for the three months ended September 30, 2024 and 2023, respectively, and $ 103 million and $ 82 million for the nine months ended September 30, 2024 and 2023, respectively.

During the third quarter of 2024, the Company concluded that triggering events had occurred for indefinite-lived tradenames in the H&CS and L&D segments, as a result of downward revisions of forecasted cash flows primarily due to lower volume and profitability expectations.

The Company performed quantitative impairment tests and determined that the indefinite-lived tradenames in the H&CS and L&D segments were impaired.

During the third quarter of 2024, the Company recorded non-cash impairment charges of $ 190 million and $ 70 million for the indefinite-lived tradenames in the H&CS and L&D segments, respectively, as the carrying values exceeded their fair values.

In addition, the Company concluded that a triggering event had occurred for long-lived assets related to its Outdoor and Recreation (“O&R”) segment, as a result of a downward revision of forecasted cash flows primarily due to lower volume and profitability expectations.

As a result, the Company estimated the future cash flows for the asset group and compared the sum of the undiscounted cash flows to the carrying value of the asset group.

The Company concluded that the sum of the undiscounted cash flows was in excess of the asset group’s carrying value.

As such, there was no impairment charge associated with the long-lived assets of the O&R segment.

During the third quarter of 2023, the Company concluded that a triggering event had occurred for an indefinite-lived tradename in the O&R segment, as a result of a downward revision of forecasted cash flows due to market conditions, as well as rising interest rates.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the O&R segment was impaired.

During the third quarter of 2023, the Company recorded a non-cash impairment charge of $ 22 million for the indefinite-lived tradename in the O&R segment, as the carrying value of the tradename exceeded its fair value.

During the second quarter of 2023, the Company concluded that a triggering event had occurred for an indefinite-lived tradename in the Home Fragrance reporting unit in the H&CS segment, as a result of a downward revision of forecasted cash flows due to softening global demand, primarily caused by continued inflationary pressure that is impacting discretionary spending behavior of consumers, as well as rising interest rates.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the H&CS segment was impaired.

During the second quarter of 2023, the Company recorded a non-cash impairment charge of $ 8 million, as the carrying value of the tradename exceeded its fair value.

Footnote 7 — Other Accrued Liabilities

Other accrued liabilities are comprised of the following (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Customer accruals $ 608 $ 659

1 unchanged sentence

Operating lease liabilities 116 122

Accrued self-insurance liabilities, contingencies and warranty 87 92

Accrued interest expense 112 74

Accrued marketing and freight expenses 63 71

Accrued self-insurance liabilities, contingencies and warranty 87 92

Accrued income taxes 58 89

Accrued marketing and freight expenses 59 71

Other 240 268

2 unchanged sentences

Debt is comprised of the following at the dates indicated (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

4.00 % senior notes due 2024 (1) (2)

10 unchanged sentences

Long-term debt $ 4,092 $ 4,575

(1) Included in short-term debt and current portion of long-term debt at June 30, 2024.

(1) Included in short-term debt and current portion of long-term debt at September 30, 2024.

(2) Included in short-term debt and current portion of long-term debt at December 31, 2023.

11 unchanged sentences

On February 7, 2024, the Company, certain of its subsidiaries, as subsidiary borrowers, and certain of its subsidiaries, as subsidiary guarantors, entered into a second amendment to the Credit Revolver agreement (the “Second Amendment”).

The Second Amendment, among other things, (i) reduced the commitments of the lenders from $ 1.5 billion to $ 1.0 billion, (ii) replaced the Company’s existing financial covenants with new financial covenants testing the Company’s Collateral Coverage Ratio and Total Net Leverage Ratio (each further defined in the Second Amendment), (iii) required the Company and certain of the Company’s domestic and foreign subsidiaries (collectively the “Guarantors”) to guarantee all obligations under the Credit Revolver including, without limitation, obligations in respect of extensions of credit to any of the borrowers, certain hedging obligations, certain cash management obligations, and certain supply chain financing obligations, and (iv) required the Company and the other Guarantors to grant a lien and security interest in certain of its assets consisting of eligible accounts receivable, eligible inventory, eligible equipment and eligible intellectual property, and all products and proceeds of the foregoing, subject to certain limitations.

certain limitations.

See Footnote 1 for further information with respect to the Company’s SCF Programs.

The Credit Revolver provides for the issuance of up to $ 150 million of letters of credit, so long as there is sufficient availability for borrowing under the Credit Revolver.

At June 30, 2024, the Company had $ 285 million of outstanding borrowings under the Credit Revolver and approximately $ 20 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $ 695 million.

At September 30, 2024, the Company had $ 170 million of outstanding borrowings under the Credit Revolver and approximately $ 29 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $ 801 million.

The indentures governing the Company’s senior notes contain usual and customary nonfinancial covenants.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

The fair value of the Company’s senior notes are based upon prices of similar instruments in the marketplace and are as follows (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Fair Value Book Value Fair Value Book Value

11 unchanged sentences

Fair Value Hedges

At June 30, 2024, the Company had approximately $ 1.1 billion notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate of interest plus a weighted average spread.

At September 30, 2024, the Company had approximately $ 1.1 billion notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate of interest plus a weighted average spread.

These floating rate swaps are designated as fair value hedges against $ 500 million of principal on the 6.375 % senior notes due 2027, $ 500 million of principal on the 6.625 % senior notes due 2029 and $ 100 million of principal on the 4.000 % senior notes due 2024 for the remaining life of the notes.

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The Company has elected the spot method for assessing the effectiveness of these contracts.

During the three months ended June 30, 2024 and 2023, the Company recognized income of $ 9 million and $ 10 million, respectively and income of $ 18 million and $ 21 million for the six months ended June 30, 2024 and 2023, respectively, in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing.

During the three months ended September 30, 2024 and 2023, the Company recognized income of $ 9 million for both periods and income of $ 26 million and $ 30 million for the nine months ended September 30, 2024 and 2023, respectively, in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing.

Foreign Currency Contracts

The Company uses forward foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales with maturity dates through December 2024.

The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges.

The effective portion of the gains or losses on these derivatives is deferred as a component of AOCL until it is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the Company’s Condensed Consolidated Statement of Operations as the underlying hedged item.

At June 30, 2024, the Company had approximately $ 256 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

At September 30, 2024, the Company had approximately $ 190 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

The Company also uses foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency exposure of certain other foreign currency transactions.

At June 30, 2024, the Company had approximately $ 886 million notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through June 2025.

At September 30, 2024, the Company had approximately $ 955 million notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through June 2025.

Fair market value gains or losses are included in the results of operations and are classified in other expense, net in the Company’s Condensed Consolidated Statement of Operations.

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Assets (Liabilities)

Balance Sheet Location June 30, 2024 December 31, 2023

Balance Sheet Location September 30, 2024 December 31, 2023

Derivatives designated as effective hedges:

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Fair Value Hedges

Interest rate swaps Other assets 1 —

Interest rate swaps Other accrued liabilities ( 7 ) ( 15 )

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Cross-currency swaps Other assets 13 15

Cross-currency swaps Other accrued liabilities ( 15 ) —

Cross-currency swaps Other noncurrent liabilities ( 114 ) ( 119 )

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The following table presents gain and (loss) activity (on a pretax basis) related to derivative financial instruments designated or previously designated, as effective hedges (in millions):

June 30, 2024 Three Months

June 30, 2023

September 30, 2024 Three Months

September 30, 2023

Gain/(Loss) Gain/(Loss)

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Total $ ( 91 ) $ ( 1 ) $ 92 $ ( 5 )

June 30, 2024 Six Months

June 30, 2023

September 30, 2024 Nine Months

September 30, 2023

Gain/(Loss) Gain/(Loss)

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Total $ ( 15 ) $ ( 10 ) $ 8 $ 3

At June 30, 2024, net deferred gains of approximately $ 2 million within AOCL are expected to be reclassified to earnings over the next twelve months.

During the three months ended June 30, 2024 and 2023, the Company recognized in other expense, net, income of $ 10 million and $ 8 million, respectively and income of $ 9 million and $ 18 million during the six months ended June 30, 2024 and 2023, respectively, related to derivatives that are not designated as hedging instruments.

At September 30, 2024, net deferred losses of approximately $ 1 million within AOCL are expected to be reclassified to earnings over the next twelve months.

During the three months ended September 30, 2024 and 2023, the Company recognized in other expense, net, expense of $ 10 million and income of $ 15 million, respectively and expense of $ 1 million and $ 3 million during the nine months ended September 30, 2024 and 2023, respectively, related to derivatives that are not designated as hedging instruments.

Gains and losses on these derivatives are mostly offset by foreign currency movement in the underlying exposure.

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International

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023 2024 2023 2024 2023

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Interest cost $ 1 $ 1 $ 1 $ 1

Amortization ( 2 ) ( 2 ) ( 4 ) ( 5 )

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Footnote 11 — Income Taxes

The Company’s effective income tax rates for the three months ended June 30, 2024 and 2023 were a provision of 46.4 % and 48.6 %, respectively, and benefit of 50.0 % and provision of 3.7 % for the six months ended June 30, 2024 and 2023, respectively.

The Company’s effective income tax rates for the three months ended September 30, 2024 and 2023 were benefit of 3.4 % and 26.8 %, respectively, and benefit of 10.5 % and 20.3 % for the nine months ended September 30, 2024 and 2023, respectively.

The differences between the U.S.

federal statutory income tax rate of 21.0 % and the Company’s effective income tax rate for the three and six months ended June 30, 2024 and 2023 were impacted by a variety of factors, primarily resulting from the geographic mix of where the income was earned, as well as certain taxable income inclusion items in the U.S.

federal statutory income tax rate of 21.0 % and the Company’s effective income tax rate for the three and nine months ended September 30, 2024 and 2023 were impacted by a variety of factors, primarily resulting from the geographic mix of where the income was earned, as well as certain taxable income inclusion items in the U.S.

based on foreign earnings.

For the three and six months ended June 30, 2024 these items increased the tax rate more than the prior period due to the lower forecasted pretax book income.

For the three and nine months ended September 30, 2024 these items increased the tax rate more than the prior period due to the lower forecasted pretax book income.

In periods where forecasted pretax income is low, the proportional impact of these items on the effective tax rate may be significant.

The three and six months ended June 30, 2024 were impacted by certain discrete items.

Income tax expense for the three months ended June 30, 2024 included a discrete benefit of $ 64 million associated with a reduction in liabilities for unrecognized tax benefits, as the tax authorities’ examination of its U.S.

tax returns for the years 2011 to 2015, as further described hereafter, and its Brazil tax returns for the years 2015 to 2017 have been completed, offset by $ 7 million of additional tax related to withholding taxes associated with certain previously taxed earnings that are no longer indefinitely reinvested.

The six months ended June 30, 2024 also included certain discrete items totaling $ 4 million of additional income tax expense.

The three and six months ended June 30, 2023 were also impacted by certain discrete items.

Income tax expense for the three months ended June 30, 2023 included a discrete expense of $ 6 million associated with a tax basis adjustment on a prior disposition.

The six months ended June 30, 2023 also included certain discrete items totaling $ 4 million of additional income tax expense.

The three and nine months ended September 30, 2024 were impacted by certain discrete items.

Income tax benefit for the three months ended September 30, 2024 included discrete benefits of $ 44 million associated with non-cash impairment charges, offset by $ 3 million of additional income tax expense.

The nine months ended September 30, 2024 also included certain discrete items including a benefit of $ 64 million associated with a reduction in liabilities for unrecognized tax benefits, as a result of the tax authorities’ examination of its U.S.

tax returns for the years 2011 to 2015, as further described hereafter, and its Brazil tax returns for the years 2015 to 2017, offset by $ 7 million of additional tax related to withholding taxes associated with certain previously taxed earnings that are no longer indefinitely reinvested, $ 8 million of interest expense associated with uncertain tax liabilities and $ 3 million of additional income tax expense.

The three and nine months ended September 30, 2023 were also impacted by certain discrete items.

Income tax expense for the three months ended September 30, 2023 included discrete tax benefits of $ 71 million due to the release of a deferred tax liability related to a U.S.

legal entity reorganization, $ 10 million due to the filing of tax returns in various jurisdictions, $ 16 million associated with impairment charges and $ 18 million due to the settlement of the U.K.

pension plan.

The nine months ended September 30, 2023 also included certain discrete items totaling $ 10 million of additional income tax expense.

On May 14, 2024, the Company received a Statutory Notice of Deficiency (“Notice”) from the Internal Revenue Service (“IRS”) for the tax years 2011 to 2015.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Dilutive securities (1)

3.0 1.1 2.9 —

Diluted weighted average shares outstanding 416.0 414.2 415.3 414.1

(1) The six months ended June 30, 2023 excludes 1.2 million of potentially dilutive share-based awards as their effect would be anti-dilutive.

At June 30, 2024, there were 0.7 million potentially dilutive stock awards with performance-based targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

(1) The three and nine months ended September 30, 2024 excludes 2.5 million and 2.8 million, respectively, of potentially dilutive share-based awards and the three and nine months ended September 30, 2023 excludes 2.1 million and 1.5 million, respectively, of potentially dilutive share-based awards, as their effect would be anti-dilutive.

At September 30, 2024 and 2023, there were 0.7 million and 0.8 million, respectively, potentially dilutive stock awards with performance-based targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

Footnote 13 — Share-Based Compensation

During the six months ended June 30, 2024, primarily in connection with its annual grant, the Company granted 1.7 million performance-based restricted stock units (“RSUs”), with an aggregate grant date fair value of $ 13 million.

During the nine months ended September 30, 2024, primarily in connection with its annual grant, the Company granted 1.7 million performance-based restricted stock units (“RSUs”), with an aggregate grant date fair value of $ 13 million.

These performance-based RSUs entitle the recipients to shares of the Company’s common stock and vest primarily at the end of a three -year period, subject to continued employment.

The actual number of shares that will ultimately be paid upon vesting is dependent on the level of achievement of the specified performance conditions.

During the six months ended June 30, 2024, primarily in connection with its annual grant, the Company also granted 5.6 million time-based RSUs with an aggregate grant date fair value of $ 43 million.

These time-based RSUs entitle recipients to shares of the Company’s common stock and primarily vest in annual installments over a one to three-year period, subject to continued employment.

During the nine months ended September 30, 2024, primarily in connection with its annual grant, the Company also granted 5.8 million time-based RSUs with an aggregate grant date fair value of $ 45 million.

These time-based RSUs entitle recipients to shares of the Company’s common stock and primarily vest in annual installments primarily over a three-year period, subject to continued employment.

Footnote 14 — Fair Value Disclosures

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The following table presents the Company’s non-pension financial assets and liabilities, which are measured at fair value on a recurring basis (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Fair value Asset (Liability) Fair value Asset (Liability)

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The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, derivative instruments, notes payable and short and long-term debt.

The carrying values for current financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate fair value due to the short

maturity of such instruments.

The fair values of the Company’s debt and derivative instruments are disclosed in Footnote 8 and Footnote 9 , respectively.

In 2019, the Company acquired an equity investment in a publicly traded Asian writing business, which is traded on an active exchange and therefore has a readily determinable fair value.

During the third quarter of 2024, the Company sold all its equity interest in the open market for proceeds of approximately $ 11 million and recorded a loss of approximately $ 2 million within other expense, net in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2024.

Nonrecurring Fair Value Measurements

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These assets and certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s annual impairment testing and as circumstances require.

In connection with the Company’s annual impairment testing at December 1, 2023, two tradenames in the Home and Commercial Solutions segment were measured at fair values of $ 491 million and $ 53 million.

Effective January 1, 2024, the tradename with the fair value of $ 53 million, no longer met the criteria to be classified as an indefinite-lived tradename and was reclassified to a definite-lived tradename with a useful life of 10 years.

During the third quarter of 2024, indefinite-lived tradenames in the H&CS and L&D segments were recorded at fair value based upon the Company’s impairment testing.

The most significant unobservable inputs (Level 3) used to estimate the fair values of the Company’s intangible assets are discount rates.

The discount rates used in the measurements of the indefinite-lived tradenames were 11.0 % and 7.5 % for the H&CS and L&D indefinite-lived tradenames, respectively.

The Company fair valued the indefinite-lived tradenames within the H&CS and L&D segments at $ 301 million and $ 65 million, respectively, on a non-recurring basis in connection with triggering events that occurred during the third quarter of 2024.

See Footnotes 1 and 6, for further information.

Footnote 15 — Segment Information

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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$ ( 121 ) $ ( 159 ) $ 58 $ ( 75 )

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Segment assets

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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The following table disaggregates revenue by geography for the periods indicated (in millions):

Three Months Ended June 30,

Three Months Ended September 30,

America International TOTAL North

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$ 1,319 $ 628 $ 1,947 $ 1,396 $ 652 $ 2,048

Six Months Ended June 30,

Nine Months Ended September 30,

America International TOTAL North

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On September 29, 2023, the Company entered into a settlement with the SEC, which concluded the investigation of the Company.

Under the terms of the settlement, the Company neither admitted nor denied the SEC’s findings and agreed to pay a civil penalty of approximately $ 13 million, which did not have a material effect on the Company’s Condensed Consolidated Financial Statements.

Company’s Condensed Consolidated Financial Statements.

Further, on June 30, 2021, the Company received a subpoena from the SEC requesting the production of documents related to its disclosure of the potential impact of the U.S.

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and the extent to which the Company’s, and other parties’ status as PRPs is disputed.

The Company’s estimate of environmental remediation costs associated with these matters at June 30, 2024 was $ 37 million which is included in other accrued liabilities and other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

No insurance recovery was taken into account in determining the Company’s cost estimates or reserves, nor do the Company’s cost estimates or reserves reflect any discounting for present value purposes, except with respect to certain long-term operations and

maintenance CERCLA matters.

The Company’s estimate of environmental remediation costs associated with these matters at September 30, 2024 was $ 37 million which is included in other accrued liabilities and other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

Because of the uncertainties associated with environmental investigations and response activities, the possibility that the Company could be identified as a PRP at sites identified in the future that require the incurrence of environmental response costs and the possibility that sites acquired in business combinations may require environmental response costs, actual costs to be incurred by the Company may vary from the Company’s estimates.

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In March 2023, the Court granted an unopposed motion to stay the OCC Litigation.

On January 5, 2024, the Court granted a motion to extend the stay pending the Court’s adjudication of the then anticipated, and currently pending, motion to enter the amended Consent Decree embodying the U.S.

On January 5, 2024, the Court granted a motion to extend the

stay pending the Court’s adjudication of the then anticipated, and currently pending, motion to enter the amended Consent Decree embodying the U.S.

EPA Settlement.

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Although the Company cannot predict the ultimate outcome of other proceedings with certainty, it believes that the ultimate resolution of the Company’s proceedings, including any amounts it may be required to pay in excess of amounts reserved, will not have a material effect on the Company’s Condensed Consolidated Financial Statements, except as otherwise described in this Footnote 16 .

At June 30, 2024, the Company had approximately $ 42 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.

At September 30, 2024, the Company had approximately $ 48 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements